401k distribution to estate account
Participant (single, not married) died with balance in 401k plan and no named beneficiaries.
401k plan provider said they are going to cut a check to the estate for the amount. They claim amount is not considered a distribution which i assume they mean a “taxable”distribution.
This does not sound correct to me.
Is it possible to defer paying income tax on the amount being distributed out of the 401k plan to the estate?
Thanks as always
Howard
Permalink Submitted by Alan - IRA critic on Tue, 2017-12-19 20:10
Sounds like a miscommunication here, so you are correct. This check is a total distribution to the estate to be reported on a 1099R containing the estate EIN. The estate must either pay taxes on it with Form 1041 or as in most cases pass the taxable income through to the estate beneficiaries on a K 1. Another example of how a 401k plan estate beneficiary is typically more costly than having an estate as beneficiary of an IRA account where the executor can often have the inherited IRA assigned to the estate beneficiaries before any distributions are made from the IRA..